The Real Cost Of U.S. In Libya? Two Billion Dollars Per Day.

The one thing most experts seem to agree on about the current coalition air campaign in Libya is that it won't cost much. A leading think tank estimated the price-tag for patrolling Libyan air space at $30-100 million per week, while the Navy's top budget official described Libyan air operations as falling within the "normal operating cycle" of his department. Rear Admiral Joseph Mulloy told trade publication
Inside the Navy
on March 21, "The incremental cost of use of the Navy and Marine Corps is low, because we're already funded and we are trained and worked up." He went on, "We don't have to pay extra to be there." As a result of such fiscal reassurances, Congress has focused mainly on the goals of the operation and what precedents military action might create, rather than the cost.

However, at a time when the federal government is borrowing about $4 billion per day from lenders like China, it might be worthwhile to focus some thought on what Admiral Mulloy was really saying. He didn't say Libya was cheap, he said most of the bill had already been paid. And therein lies the crux of a fiscal dilemma that politicians and policymakers will face as they struggle to reduce the biggest budget deficit in the history of the world. Can America continue to sustain the kind of global military posture that enables it to simultaneously execute a no-fly zone in Libya, a counter-insurgency campaign in Afghanistan, disaster relief in Japan, and a host of other operations from the Balkans to the Persian Gulf to the Horn of Africa? While its European allies seem hard-pressed to cope with a modest military challenge on their own doorstep, America has embraced a global role that requires its forces to be pretty much everywhere there is a threat of instability. So what looks like an inexpensive military operation in Libya is actually costing taxpayers about $2 billion per day, because that's what the Pentagon and other security agencies of the federal government spend to maintain a posture that allows the military to go anywhere and do anything on short notice.

There is good reason to believe that posture is no longer affordable -- or more precisely, that the public is no longer willing to afford it. When the new millennium began barely ten years ago, the United States was generating roughly a third of global economic output and also sustaining about a third of worldwide military spending. Since that time, though, the two measures of power have diverged dramatically, and so today America only produces about a quarter of output while trying to sustain nearly half of military spending (over $700 billion in a global total of $1.6 trillion). In other words, five percent of the world's population is trying to cover fifty percent of the world's military bills with only a quarter of the world's wealth. That's the sort of equation that might make sense in a national emergency, but it looks untenable as a long-term proposition. Yet Pentagon policymakers say they can't make ends meet for much less money, and Defense Secretary Robert Gates asserted last year that when it comes to deficit reduction, "we are not the problem" -- even though his department consumes a fifth of the federal budget and has seen its buying power grow by three-quarters over the past ten years.

A look at the weapons used in the Libyan operation reflects just how unique America's military is. No other country in the world has anything remotely like the stealthy B-2 bombers that flew precision bombing runs over Libya from a base in Missouri. Nor does anyone else have a fleet of 500 aerial refueling tankers that can keep the B-2 and other warplanes airborne for many hours. Nor does anyone have the amphibious ready groups, the overhead reconnaissance assets, or the inventory of smart munitions employed in the operation. Even the V-22 Osprey "tilt-rotor" aircraft used to rescue a downed American pilot is unique -- no other country has tried to build one, much less field a sizable force of them. The world has never seen a military force like the one America operates today, and that's before you even get to the extraordinary skills and professionalism of the best-trained warfighters anywhere. But is it all affordable for a country that is seeing its share of global wealth steadily decline, a country that doesn't want to raise taxes despite a $1.5 trillion deficit? To answer that question let's start at the beginning -- not 9-11 or 1945, but all the way back in 1776.

When Edward Gibbon published the first volume of
The Decline and Fall of the Roman Empire
in 1776, it was an instant hit among the men who would come to be known as America's "founding fathers." George Washington found one of Gibbon's insights about the Romans especially striking: "They preserved peace by a constant preparation for war." He liked that sentiment so much that he paraphrased it in the first State of the Union speech in 1790, asserting that "to be prepared for war is one of the most effectual means of preserving peace." But neither Congress nor his fellow countrymen seemed to be listening. They had sold off the Continental Navy after the Treaty of Paris ended the Revolutionary War in 1783, and thus as President, Washington had no way of protecting U.S. shipping against pirates or the navies of other powers. Congress had to appropriate money to build new ships before the Navy could deal with Barbary pirates who had seized U.S. merchant ships and sailors. The Marine invasion of the "shores of Tripoli" (modern-day Libya) in 1805 thus had to be improvised.

It would be over 150 years before Washington's successors were able to convince voters that maintaining a large peacetime military posture made sense. The Union Army enrolled over a million men in the final year of the Civil War, but by the time the nation's Centennial year arrived 11 years later, the force had shrunk to a mere 29,000 soldiers -- in a country of 40 million people spanning a continent. The hastily assembled force of 2.9 million soldiers and sailors that America sent to battle the Germans in World War One was allowed to dwindle to a mere 244,000 personnel by 1933, the year Hitler came to power. America's political culture simply wasn't willing to support a large peacetime military force, which is why it was necessary to mobilize the commercial economy for war production every time a threat arose -- peacetime military contracting was a very modest affair until the Cold War came along.

The Cold War, though, changed everything, because for 40 years America lived under the constant threat of Soviet nuclear attack. Once policymakers settled on a strategy of deterrence and containment, the United States had to field credible military forces around the Sino-Soviet periphery, a posture that would have been unaffordable in earlier days. Fortunately for military planners, World War Two had stimulated America's economy to unprecedented levels of industrial production, and that dynamism persisted into the postwar period as the government spent heavily to develop a new generation of military systems, from long-range bombers to nuclear-powered submarines to reconnaissance satellites. With the military claiming over a tenth of the world's biggest economy, it was possible for the first time to have a substantial peacetime defense establishment, and three straight decades of postwar prosperity made it possible to believe there were no opportunity costs involved.

By the time the Cold War ended in the early 1990s, few Americans could remember a time when their nation had not maintained a sprawling global military presence. Defense spending fell from five percent of the economy to three as the Clinton Administration moved to claim a peace dividend, but with the economy growing fast and the Red Army a fading memory, America remained the dominant global military player. Cutting the Pentagon's buying power by a third from the peak level of the Reagan years reduced its share of the federal budget from 25 percent to 15 percent and helped President Clinton to eliminate the deficit, and yet it didn't seem to harm national security because threats had receded and much of the military's equipment had only recently been purchased. Thus, as the American Century ended, many experts believed the U.S. could continue to be the world's policeman without unduly stressing its economy.

Historians will be writing for centuries to come about how quickly this all went sour. Within a year after Clinton left office the economy was headed into recession and defense priorities were reordered by the 9-11 attacks. Against that backdrop, few policymakers paid attention to the fact that China joined the World Trade Organization during President Bush's first year in office, but a decade later the impact of that development on America's ability to afford its defense bills was becoming increasingly apparent. Had 9-11 not occurred, U.S. policymakers might have continued to gradually reduce the overseas network of military bases and commitments the nation had built up during Cold War years while paying more attention to domestic economic trends. Instead, they took on a host of new foreign commitments as they prosecuted a multi-front "global war on terror," and defense was one of the few sectors that fared well in a faltering economy. The first decade of the new millennium thus proved to be a period of decline for America, one that ended with President-elect Obama being warned by the intelligence community's most senior panel of seers that the on-going transfer of wealth from the West to the East was "without precedent in modern history."

Which brings us back to the real price of the current military operation in Libya. The military posture that President Obama inherited from his predecessor is expected to cost taxpayers about $726 billion this year -- $549 billion for the defense department's so-called base budget, $159 billion in supplemental funding for Iraq and Afghanistan, and about $18 billion in Department of Energy spending on nuclear-weapons activities. That's assuming Congress gets around to approving a real defense budget for fiscal 2011 rather than just passing more continuing resolutions. If the cost of veterans' benefits and various homeland security programs (such as the Coast Guard) were included in this total, U.S. security expenditures would come very close to half of the global total. On any given day, the United States has over 350,000 of its 1.5 million military personnel deployed abroad, and that does not include hundreds of thousands of civilians, both members of the civil service and contractors. Most of the military infrastructure and personnel located within the United States exist to provide a rotational base, training complex and supply network for the forces deployed abroad. It is this vastly complex and costly system -- which stations U.S. troops in over a hundred countries and deploys U.S. sailors to all the world's oceans -- that made it possible to participate quickly and effectively in the Libyan no-fly zone, bringing capabilities to bear that no other country could match.

According to the Pentagon comptroller's
National Defense Budget Estimates For FY 2012, the defense establishment currently claims 20 percent of the federal budget and five percent of the U.S. economy -- meaning that after eight years of steady increases under President Bush, military outlays have reverted to the proportion of fiscal and economic resources seen when Bill Clinton inherited the defense establishment from Bush's father. Past experience suggests that the nation is quite capable of sustaining the current level of effort if it chooses to do so. In fact, it devoted a bigger share of national wealth to defense for most of the postwar period. So the question for the future isn't whether current defense outlays are affordable in an absolute sense, but rather whether the political system is willing to afford them. And there, the outlook isn't so promising. The accumulation of budget deficits in excess of a trillion dollars per year reflects the unwillingness of politicians and the voters who elected them to forego entitlement programs and various forms of domestic discretionary spending such as law enforcement and education grants. If the cost of financing the federal debt rises to a point where taking on additional debt is too painful, it is not clear voters will continue backing the current level of military outlays in the absence of urgent new threats.

One reason to doubt the level of popular support has to do with the way in which the price-tag for the All Volunteer Force has ballooned since George W. Bush took office. For three decades prior to his election, the compensation costs of soldiers and sailors fairly closely tracked the employment cost index for private labor markets. However, as Stephen Daggett of the Congressional Research Service has demonstrated, the rate of increase in the cost of military pay and benefits drifted far above what was typical for private-sector workers after fiscal year 2000. It now costs well over $100,000 per year to cover the pay and benefits of a typical warfighter, and the government's financial obligations for career military personnel typically extend decades into the future. Rapid growth is especially noticeable in the case of military healthcare benefits, which Congress has generously extended to reservists, retirees and dependents at rates that no private enterprise could afford. Healthcare now costs the Pentagon over a billion dollars per week, and the trend-line in spending strongly resembles the explosive growth in outlays for civilian entitlements such as disability payments. It is hard to believe voters will keep supporting military benefit programs substantially more generous than they can obtain for themselves at a time when threats to national security seem to be in abeyance.

Pay and benefits are just part of the problem, though. Despite decades of effort to reform weapons purchases, the defense department wastes many billions of dollars every year developing and sustaining weapons. A recent study found the Army alone squanders over $3 billion each year on weapons it ends up canceling, and the other services aren't much better. The weapons that make it into the field are the best ever made, but they typically are procured in uneconomical lots and using excessively burdensome procedures that drive up costs. And then there is the broader question of why U.S. forces need to go to places like Kosovo and Somalia and Libya at all -- a perennial debate in American politics that is more likely to be won by those who oppose intervention when the tradeoff is fewer resources available for domestic programs. The current administration, like the one before it, has sought to avoid making hard choices by simply borrowing more money at a time when interest rates are low. But that approach won't work forever, and so Washington is about to have a new debate concerning what Vietnam-era defense official Townsend Hoopes called "the limits of intervention." When the smoke clears, America's military budget is likely to be a lot smaller, and the prospects for future adventures in places like Libya much diminished.